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$1,800. If the firm chooses to refurbish the equipment, materials and labor will be $1.10 per board. If it chooses to make modifica- tions, materials and labor will be $0.70 per board. If it buys new equipment, variable costs are estimated to be $0.40 per board. a) Graph the three total cost lines on the same chart. b) Which alternative should Ski Boards, Inc., choose if it thinks it can sell more than 3,000 boards? c) Which alternative should the firm use if it thinks the market for boards will be between 1,000 and 2,000? Px (monager of Urban's Motor Court

$1,800. If the firm chooses to refurbish the equipment, materials and labor will be $1.10 per board. If it chooses to make modifica- tions, materials and labor will be $0.70 per board. If it buys new equipment, variable costs are estimated to be $0.40 per board. a) Graph the three total cost lines on the same chart. b) Which alternative should Ski Boards, Inc., choose if it thinks it can sell more than 3,000 boards? c) Which alternative should the firm use if it thinks the market for boards will be between 1,000 and 2,000? Px (monager of Urban's Motor Court

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Please help answer 7.6 a b & c. Thank you

### 7.5 **Stan Fawcett’s Company:** Stan Fawcett’s company is considering producing a gear assembly that it now purchases from Salt Lake Supply, Inc. Salt Lake Supply charges $4 per unit, with a minimum order of 3,000 units. Stan estimates that it will cost $15,000 to set up the process and then $1.82 per unit for labor and materials. - **a)** Draw a graph illustrating the crossover (or indifference) point. - **b)** Determine the number of units where either choice has the same cost. ### 7.6 **Ski Boards, Inc.:** Ski Boards, Inc., wants to enter the market quickly with a new finish on its ski boards. It has three choices: - **(a)** Refurbish the old equipment at a cost of $800, - **(b)** Make major modifications at a cost of $1,100, or - **(c)** Purchase new equipment at a net cost of $1,500. ### Image Description: The image shows a snowboarder performing a jump on a snowboard, demonstrating skill and agility. The snowboarder is wearing winter clothing and safety gear, including a helmet. This scene is set against a snowy landscape with trees in the background and an audience observing from below. Photo Credit: Eric Lindy / Shutterstock
Transcribed Image Text:### 7.5 **Stan Fawcett’s Company:** Stan Fawcett’s company is considering producing a gear assembly that it now purchases from Salt Lake Supply, Inc. Salt Lake Supply charges $4 per unit, with a minimum order of 3,000 units. Stan estimates that it will cost $15,000 to set up the process and then $1.82 per unit for labor and materials. - **a)** Draw a graph illustrating the crossover (or indifference) point. - **b)** Determine the number of units where either choice has the same cost. ### 7.6 **Ski Boards, Inc.:** Ski Boards, Inc., wants to enter the market quickly with a new finish on its ski boards. It has three choices: - **(a)** Refurbish the old equipment at a cost of $800, - **(b)** Make major modifications at a cost of $1,100, or - **(c)** Purchase new equipment at a net cost of $1,500. ### Image Description: The image shows a snowboarder performing a jump on a snowboard, demonstrating skill and agility. The snowboarder is wearing winter clothing and safety gear, including a helmet. This scene is set against a snowy landscape with trees in the background and an audience observing from below. Photo Credit: Eric Lindy / Shutterstock
**Chapter 7: Process Strategies** Page 301 $1,800. If the firm chooses to refurbish the equipment, materials and labor will be $1.10 per board. If it chooses to make modifications, materials and labor will be $0.70 per board. If it buys new equipment, variable costs are estimated to be $0.40 per board. a) Graph the three total cost lines on the same chart. b) Which alternative should Ski Boards, Inc., choose if it thinks it can sell more than 3,000 boards? c) Which alternative should the firm use if it thinks the market for boards will be between 1,000 and 2,000?
Transcribed Image Text:**Chapter 7: Process Strategies** Page 301 $1,800. If the firm chooses to refurbish the equipment, materials and labor will be $1.10 per board. If it chooses to make modifications, materials and labor will be $0.70 per board. If it buys new equipment, variable costs are estimated to be $0.40 per board. a) Graph the three total cost lines on the same chart. b) Which alternative should Ski Boards, Inc., choose if it thinks it can sell more than 3,000 boards? c) Which alternative should the firm use if it thinks the market for boards will be between 1,000 and 2,000?
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